Health Insurance Hoopla

---Shares

October 1, 1996

By Karen Moeller

High cost of health insurance got your small-business budget in
a bunch? AgriPlan/BizPlan, a tax reduction service based in Adel,
Iowa, estimates that in 1995, 40,000 self-employed business owners
each saved an additional $1,800 in taxes through a provision in the
Internal Revenue tax code.

The deduction, under IRS Tax Code Section 105, applies to
married, self-employed taxpayers who formally hire their spouses as
employees. If your spouse receives a salary for services performed
for your business--even if he or she holds another job
elsewhere--you can deduct 100 percent of your family's
health-insurance premiums and non-insured medical expenses.

But be forewarned: the deduction is recommended for businesses
with three or fewer employees, because the law requires employers
to include all employees in the plan. For businesses with more than
three employees, the cost of including them all may outweigh the
savings benefits of the deduction.

"This plan works best for companies with one to three
employees," says president Phillip Harrington, "because
even if you are covering their expenses, it will still be to your
benefit. If you have 20 employees, you could still use the Section
105 deduction, but quite frankly, you're better off getting a
cafeteria plan like most larger companies do. The Section 105
deduction is truly meant for the mom and pop operation."

AgriPlan/BizPlan will act as a third party
administrator--setting up a Section 105 deduction plan to comply
with IRS, Department of Labor and Employee Retirement Income
Security Act (ERISA) regulations--for $175 per year. "We
don't prepare taxes, we don't sell insurance programs--all
we do is administer Section 105 deductions," says Harrington.
"And because we're national, we can do it
inexpensively."

All plans are backed with an audit guarantee. If you think your
small business might qualify for this little-known deduction, talk
to your accountant. You can also contact AgriPlan/BizPlan directly
at (800) 298-2923, or write to P.O. Box 267, Adel, IA 50003.